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Tackling wage discrepancies in Indonesia

Issues Fair Compensation

In 2012, the Indonesian government increased minimum wages across the country. These increases range from three to 30 percent, depending on the province, with the most significant change seen in Kota Tangerang and Kabupaten Tangerang: 30.39 percent and 30.93 percent, respectively.

In a country where gross annual income can be as low as $54, this wage adjustment would greatly benefit employees – however, some employers worked with the Employer Association (APINDO) to challenge the increases. The involved parties produced a vaguely worded agreement that may waive the wage increase ruling for small businesses.

The FLA Workplace Code of Conduct unequivocally states that payment of the legally established minimum wage is not optional and cannot be modified through alleged waivers negotiated by employers and unions. Members with suppliers in Indonesia, particularly in the industrial areas of Bekasi, Purwakarta, and Tangerang, should take immediate action to ensure that workers receive the legally established minimum wage.

The importance of this issue and the need for companies to take action was communicated in a memo to FLA members this month.

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